Gold prices slipped on Wednesday and came off 3-1/2-month highs hit in the previous session as investors reaped profits and physical buying subsided.
But worries about global economic growth still underpin gold's safe-haven appeal and technical charts indicate the metal is set to rise.
Gold eased 0.21 percent to $1,318.20 an ounce by 0714 GMT. It touched $1,332.10 an ounce on Tuesday, the strongest since Oct. 31, before shedding some of the gains. Bullion has risen around 9 percent so far this year.
"After breaking $1,300, gold has to consolidate before we can charge higher again," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
"Buying is not that aggressive on the physical side. Approaching $1,320, we saw small lots of buying but also encountered some selling," Leung said.
But gold's technical picture has improved after it breached the tough barrier of $1,300, said Leung. "It's slightly bullish from here. Whether it can break $1,350, we have to see," he added.
Premiums for gold bars in Hong Kong were steady at $1.30 to $1.70 an ounce over the spot London prices. Holdings of the largest gold-backed exchange-traded fund(ETF), New York's SPDR Gold Trust, fell 0.63 percent on Friday from Thursday, and the largest silver-backed ETF, New York's iShares Silver Trust, decreased 0.59 percent during the same period.
Net gold demand fell 15 percent in 2013 as huge outflows from physically backed investment funds outweighed record consumer demand but that disinvestment is tailing off this year, the World Gold Council said on Tuesday.
Gold investors may scrutinise minutes of the U.S. Federal Reserve's January policy meeting when it decided to trim its asset buying by another $10 billion. The minutes are due at 1900 GMT.
Hedge funds and money managers had raised their bets in gold futures and options to a three-month high on signs the Fed will not rush to cut its stimulus, Commodity Futures Trading Commission data showed on Friday.
U.S. gold futures, which often influence movements in cash gold, slipped 0.47 percent to $1,318.20 an ounce.
"Outlook wise, we continue to remain fairly constructive on gold over the short-term, although we have to suspect that the bulk of the price climb is likely behind us," Edward Meir, an analyst at INTL FCStone, said in a report.
In other markets, Asian share markets were in